Galvanised by America’s move to withhold $472 million from the Millennium Challenge Account last year, the Tanzanian government is seeking to overhaul its energy legal and regulatory framework to attract investments in alternative sources of energy.

The board of the Millennium Challenge Corporation deferred a vote over Tanzania’s eligibility to the funds meant for electrification. It is suspected that this was because of the impasse in Zanzibar and the arrests under the cyber crime law during October elections.

The overhaul may see some regulatory authorities linked to the energy sector disbanded or merged, sources within the government say.

The review would enable the country achieve its ambitious plan of increasing access to power to over 90 per cent of the rural population by 2025.

Despite provision of solar energy to nearly 50 per cent of dispensaries in over 3,000 villages the government says lack of financial investment and technology hampered its efforts to expand energy services to 16,000 primary schools countrywide.

The suspended $472 million grant was meant mainly to fund electrification projects through the country’s rural electrification agency, Rural Energy Agency.

READ: US cancels $472m Tanzania aid deal over Zanzibar election

Tanzania has discovered massive natural gas amounting to 1.9 trillion cubic feet, 200 million tonnes of uranium and 200 million tonnes of coal but it lacks the technology, finance and expertise to develop the resources which could help the government increase its energy efficiency. The Prime Minister Kassim Majaliwa appealed to investors to consider investing in the energy sector.

“The government has the goodwill to allow investors to operate in Tanzania,” Mr Majaliwa said at the 51st Annual Meeting of the African Development Bank (AfDB).

Despite recent government efforts to provide electricity to rural areas, the rural electrification coverage is low in Tanzania with only 11 per cent of the population having access to electricity.

AfDB says that about $3.5 billion will be needed to increase the rural electrification ratio from 6.6 per cent to 36.6 per cent in rural areas and the urban rate from 34.2 per cent to 75.7 per cent.

Although the prime minister did not disclose the laws and regulations the government was changing sources told The EastAfrican that the country’s Chief Secretary, John Kijazi wrote a letter to permanent secretaries on April 29 directing them to recommend government agencies and bodies under the ministries that should be disbanded or merged.

Ewura

After the Petroleum Act was passed last year, energy stakeholders questioned some of the duties given to the Energy and Water Utilities Regulatory Authority (Ewura) and a number of regulatory bodies in the country.

The government is working on the National Energy Policy and Regulations that are likely to be finalised by end of the year. 

Big Results Now initiative, a Malaysian development strategy seeking to transform the country’s transition to a middle-income economy in key sectors such as energy is likely to be in the spotlight during the envisioned changes.

The agency had a budget of over $16 million (Tsh3.6 billion) last financial year but it is likely to be allocated$148,000 (Tsh332 million) in the new financial year, a reduction of over 90 per cent of its budget, according to government sources.

According to Ewura, the number of customers connected to Tanesco in 2015 was 1,502,474 compared with 1,298,468 customers in 2014.

The growth in customers was attributed to extension of the distribution network funded by the Rural Energy Fund. This has increased access to electricity to about 36 per cent, surpassing the government target of 30 per cent access by end of 2015.